Monopoly as the Uber Business Model

Posted on December 19, 2016 by Benjamin Sachs    

Naked Capitalism recently ran a five-part series on the Uber business model.  I can’t speak to the accuracy of the conclusions, but the arguments are striking and the series should go on the reading list of anyone interested in the gig economy and its implications for workers.  According to the series, which is summarized in the fourth post, Uber’s business model consists of: predatory pricing, underwritten by venture capital, aimed at securing a monopoly position in the urban car service industry.

To unpack that a bit, the argument proceeds as follows:

     Uber is unprofitable. It has grown and succeeded to date by engaging in below-cost pricing and subsidizing that pricing scheme with $13 billion in venture capital investments.  As the post put it: “Uber is a fundamentally unprofitable enterprise, with negative 140% profit margins.”  And, “Uber’s ability to capture customers and drivers from incumbent operators is entirely due to predatory competition funded by massive investor subsidies – Uber passengers were only paying 41% of the costs of their trips, while competitors needed to charge passengers 100% of actual costs.”

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Continua qui: https://onlabor.org/2016/12/19/monopoly-as-the-uber-business-model/